PSINet shareholders also approved a $50 million investment today in Xpedior, a Metamor spinoff that will help PSINet become a "one-stop shop" for Internet access, Web hosting, Web design and e-commerce services.
Before Xpedior became an independent company in October, Metamor held an 80 percent interest in the company. According to the deal, which took effect today, PSINet will have 80 percent ownership of Xpedior.
The deals had almost no effect on stock prices. At the 1 p.m. PT close of regular trading, PSINet was unchanged at $30.12. Metamor was up 44 cents to $27.31, and Xpedior was up 56 cents to $17.38.
Herndon, Va.-based PSINet, which will integrate Metamor's 4,500 employees with its 4,500 workers, is one of the largest infrastructure providers to corporations worldwide. The company owns and operates fiber, satellite, Web hosting and switching facilities, providing direct Net access in more than 800 metropolitan areas in 27 countries on five continents.
PSINet's investment in Xpedior is expected to transform the 1,500-employee consulting firm into a global e-business powerhouse. Chicago-based Xpedior, which will continue to operate as an independent company, plans to open offices in Germany, Hong Kong and Latin America in the second half of the year. It already has 20 offices in the United States, the United Kingdom, Canada and Australia.
"Xpedior will deliver the front-end services for customers who want to use the Net," Xpedior chief executive David Campbell said. "PSINet will get the recurring revenues from hosting and other services."
Xpedior competes with Viant, Razorfish, Proxicom and other companies in the hot niche known as "interactive architecture." Such companies provide consulting services, mainly to the world's largest 2,000 corporations, as old-economy businesses start or expand e-commerce plans.
According to a report from research firm International Data Corp., the relatively unknown segment is expected to grow 60 percent per year from 1998 to 2003.
Under the terms of an agreement signed today, PSINet plans to invest $50 million in Xpedior through convertible preferred shares that will have an initial conversion rate of $37.50 per share. The investment will likely close within 30 days.